While the past several years of regulatory uncertainty have frustrated, if not left, the derivatives industry treading water, capital markets research firm TABB Group, in new research, believes the coming post-Dodd-Frank period portends to be a watershed moment in innovation and migration for many capital markets firms.
Now that final parts of the new regulatory landscape for over-the-counter (OTC) and exchange-traded derivatives (ETDs) may be nearing enactment – seven years after the global financial crisis that set the process in motion and five years after the Dodd-Frank law set the framework for sweeping new regulations, TABB Group principal, head of futures research Matt Simon, and contributing analyst
Andy Yemma, who co-authored “Regulatory Exhaustion: The Market Opportunity Ahead,” say that futurisation and product alternatives for the traditional OTC swaps business are starting to appear as direct beneficiaries of regulatory change. They believe that advancements made by the vendor and brokerage community sparked by regulatory change will make trading and finding more profitable trades a more sophisticated and deeper analysis for market participants.
According to Simon, the coming regulatory implementation is a potential period of unprecedented product and service innovation in the exchange-traded derivatives markets. “In 2015, movement of swaps onto clearing platforms is largely a fait accompli, but movement onto exchanges and swap execution facilities (SEFs) and into ETD products like futures and options on futures (OOFs) will require innovation, education and, above all, value that enhances their decision.”
